As the comment period for a rule on the extraterritorial application of Dodd-Frank-mandated swap rules draws to a close, the CFTC is receiving a large volume of comments on the rule, the majority of them critical.
Although the agency issued interpretive guidance on June 29 that waters down the rule by allowing so-called substituted compliance for firms based in jurisdictions whose regulatory regime is “comparably robust and comprehensive,” critics have not been appeased, complaining that the rules and exceptions are vague and sometimes contradictory, as in the case of the definition of “U.S. person.”
Notable comments on the rule include:
- The Australian Securities and Investments Commission, the Reserve Bank of Australia, the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore issued a joint letter that warned of “unintended consequences” for non-U.S. market participants.
- The Investment Industry Association of Canada stated that many of its members are preparing to register with the CFTC as swap dealers or major swap participants.
- The Japanese Bankers Association argued that requiring Japanese firms that deal with U.S. persons to register with the CFTC would subject them to duplicative regulation, as they are already heavily regulated by local authorities.
Other entities that have submitted comments include the Swiss Financial Market Supervisory Authority, the French Ministry of Economy and Finance, the U.K. Financial Services Authority, the Association for Financial Markets in Europe, the London Metal Exchange, the Korea Federation of Banks, the Association of German Banks, and the European Commission.